Lloyds Banks announced strong profits of £6.9 billion in its end of year results for 2021, however its results fell below analyst-predicted profits of £7.2 billion.
Lloyds’ share price has taken a major hit with the stock dropping 7.3% to 48.37 in the early morning, although the crisis in Ukraine would account for much of the drop.
Dividends have been reported at 2p per ordinary share and earnings per share at 7.5p, with a share buyback scheme of £2 billion reported by the bank.
Lloyds enjoyed a boost to underlying profit as a result of £1.2 billion in emergency reserves the bank allocated to help with pandemic-linked defaults on loans which were subsequently unneeded.
“In the context of continued business momentum and balance sheet growth, the Group has delivered a solid financial performance with statutory profit after tax of £5.9 billion, significantly higher than 2020,” said Lloyds Bank CEO Charlie Nunn.
“Increased profits benefitted from higher income and the net underlying impairment credit of £1.2 billion in 2021, driven by improvements to the macroeconomic outlook for the UK, combined with robust observed credit performance.”
“Underlying profit before impairment of £6.8 billion was up 6 per cent on 2020, with increased average interest-earning assets, a strengthened banking net interest margin and early signs of recovery in other income, alongside a reduction in operating lease depreciation.”
It was not entirely good news for the FTSE 100 company, however, as its financial results were significantly dented by fraud costs from the HBOS Reading sector.
The bank was forced to pay £1.3 billion pounds, alongside a charge of £600m for costs linked to fraud at its HBOS Reading branch.
“Remediation charges increased in the year to £1,300 million, with £775 million in the fourth quarter,” said Nunn.
“The full year remediation charges relate to a number of pre-existing legacy issues and include a £790 million charge relating to HBOS Reading which reflects the Group’s estimate of its full liability, albeit significant uncertainties remain.”
“We continue to support the independent Foskett Panel re-review and Dame Linda Dobbs’ independent review process as we work to bring this matter to a conclusion.”